Workers’ compensation insurance is one of the most important aspects of running business. An essential part of protecting both your employees and your business, workers’ comp is a form of insurance that provides financial support for employees injured while working.
Despite its importance, workers’ compensation (also known as “workman’s comp”) is one of the most commonly misunderstood aspects of running a business.
Below, we’ve covered three key things your business needs to know about workers’ comp, from the legal side of insuring your business to the types of injuries and conditions that are covered under work injury compensation.
#1: Workers’ Compensation Insurance is a Legal Requirement
While workers’ comp laws can vary between states, it’s almost always a legal necessity for your business to carry some form of work injury compensation insurance.
For example, in California, businesses with any number of employees are required to purchase workman’s compensation insurance. The only real exceptions are sole proprietorships in which the business owner is the only employee.
If you’re not covered, your business could face significant fines, as well as major financial risks if one of your employees is injured at work.
Depending on your state, there may be exceptions depending on the number of employees your business hires and other factors. However, for the most part, the insurance is a legal requirement for your business.
#2: Not all Workplace Injuries are Covered by Workers’ Compensation
While workman’s compensation insurance covers the vast majority of workplace injuries, there are specific situations in which your employees may not be able to receive the benefits.
These include injuries that occur during criminal activity, workplace injuries that are self-inflicted by an employee, injuries that occur while the employee was not working and injuries that occur while an employee is violating company policy.
These situations are limited, meaning it’s rare for a workplace injury to fall outside the scope of workers’ compensation insurance. However, as an employer, it’s still important to be aware of the limitations.
#3: Workers’ Comp Doesn’t Provide Full Protection Against Lawsuits
While workers’ comp protects your business against almost all legal action from injured employees, there are specific situations in which an employee may still be able to sue you over an injury.
These include injuries that occur while an employee is at work but outside the normal scope of their job, as well as injuries that occur intentionally as a result of the actions of your business.
Like situations in which work injury compensation doesn’t provide coverage, these cases are very limited. However, it’s still important to be aware of the limits on the legal protections provided by workers’ comp.
Does Your Business Have Insurance?
Operating a business without workers’ comp insurance is a risky decision. Not only can you face fines — your business could also be forced to deal with significant costs in the event an employee is injured while at work.
As insurance specialists, we can help you find a cost-effective, comprehensive workman’s comp insurance plan. Learn more about our range of insurance policies and find the perfect policy for your business now.